Leonid Kuchma is 87 years old. His story is at once mysterious, dirty, and wide-scale — just like his times

Chapter 1. Where Leonid Kuchma rises to the top

There comes a day in the career of any politician when he finds himself at the peak of his influence and power. For Leonid Kuchma, that day was November 30, 1999.

That day he became the head of state for the second time. For the second time, he passed the inauguration ceremony. For the second time, he swore to serve the Ukrainian people. For the second time, he accepted the symbols of presidential power. Everything that happened after that was a long farewell to this power, forced and painful. But that day he was an unconditional triumphant.

It was gloomy and cold in Kyiv. Seven presidents, two prime ministers, and the head of the regionʼs most influential energy corporation were waiting for him outside the walls of the Mariinsky Palace to follow him to an official reception: young and old people, heads of autocracies and democracies. For five years, they had watched President Leonid Kuchma consolidate his power in the vast, difficult post-Soviet country and become a major independent player in Central Europe.

On inauguration day, friends and foes, partners and rivals, stood outside the Mariinsky Palace. His friend Aleksander Kwasniewski had just achieved a major geopolitical success — he had brought his country into NATO. Leonid Kuchma was nearby when it happened, at a summit in Washington. In the same days, the North Atlantic Alliance took a few small steps toward Ukraine: it sent two liaison officers to Kyiv and designated the Yavoriv training ground as a center for joint exercises.

Equal partnership relations have been established with Russia. Four months ago, the long-suffering agreement on the status of the Russian fleet in Crimea came into force. With the permission of the Ukrainian government, Russian oil companies have already privatized (or are about to privatize) three key oil refineries.

The symbol of relations between the two countries is the football match between the national teams of Ukraine and Russia — it is played with great fanfare on the eve of the presidential elections. Just before the match, the TV channels of the two countries hold a television bridge.

In the Moscow studio sits the young, but already quite popular Prime Minister Vladimir Putin — he is attractive, witty and radiates friendliness. The match ends with a score of 1:1. Today, Putin is at the inauguration.

Strong ties with Russia allow Leonid Kuchma to play the role of mediator and peacemaker in his region. He is helping Moldova, a tiny agrarian-trading country that has been bleeding for many years. He met President Luczynski, who came for the inauguration, a little less than six months ago, in July. Ukrainian military observers are currently working in Moldova.

Moreover, Russia has promised that it will no longer hold Moldova by the throat with its military contingent in Transnistria. It will withdraw its troops from there by 2002 — this is recorded in the document that the head of the Russian Foreign Ministry Leonid Kuchma and the president of Turkey signed just a week ago in Istanbul, at the OSCE summit. Today, the president of Turkey is at Leonid Kuchmaʼs inauguration.

Leonid Kuchma has good personal relations with Presidents Bill Clinton and Boris Yeltsin. For years, he has been building a fragile balance between the interests of the United States and Russia. Thanks to this, he has just returned Ukraine to the “big space”.

Only a month ago, the international consortium Sea Launch conducted its first commercial launch. A three-stage rocket put several navigation satellites into orbit. The rocket was designed by the KB “Pivdenne”. It was assembled by the native “Pivdenmash” plant. At the head of both enterprises are engineers whom Kuchma has known for decades.

Ukraine cannot be called a full-fledged space state. To do this, it needs its own cosmodrome, which cannot be built on the territory of the country. But Leonid Kuchma already knows where this can be done. And for now, thanks to his efforts, Ukraine is a serious player in the space launch business.

Leonid Kuchmaʼs power is also strong inside Ukraine. Big, dangerous figures have challenged him, he has engaged in clashes with them and emerged victorious.

The former head of SBU Yevhen Marchuk, a representative of the cohort of Ukrainian “chekists”, was neutralized. Another rival, socialist Oleksandr Moroz, was electorally humiliated. The traitor Pavlo Lazarenko fled and is under investigation in America. The government is headed by a loyal prime minister. Four obedient factions sit in the Verkhovna Rada.

Together with the friendly “People’s Movement”, they provide the necessary number of votes — this is monitored by the “director of the parliament”, businessman Oleksandr Volkov. There are “their” people — at the head of the Prosecutor General’s Office, in the police, and in SBU. They supervise, in particular, one by one. But most importantly — the main economic flows are under his control. His protege runs “Naftogaz”. Energy networks, the largest metallurgical and chemical plants, mining and quarrying complexes and mines, and the most influential TV channels are owned by businessmen who owe him a lot.

On November 30, 1999, these TV channels broadcast live from the “Ukraine” Palace. The hall is packed to the brim. The second president of Ukraine takes the oath, placing his hand on the Peresopnytsia Gospel.

The scene of the "Ukraine" Palace, where the inauguration took place.

Leonid Kuchma takes the oath. Kyiv, November 30, 1999.

The day before the inauguration, Leonid Kuchma signed a special decree introducing new ceremonial attributes: a mace and a collar. On the day of his inauguration, they are used for the first time. Leonid Kuchma holds a mace in his hand, a symbol of the centuries-old continuity of his power.

A collar badge consisting of seven medallions is hung on his chest. The medallions bear symbols of Ukrainian statehood: tridents, coats of arms of principalities, the symbol of the Hetmanate, and the coat of arms of the Ukrainian Peopleʼs Republic.

Leonid Kuchma gives a speech in front of seven presidents and two prime ministers. He says that Ukraineʼs strategic goal is to join the European Union. He says: "Ukraine will never give up its independence again."

Section 2. Where Leonid Kuchma reads "Ukrainska Pravda"

Leonid Kuchma was not a nationalist, but he understood the importance of national symbols. The Hetmanʼs mace and the collar with symbols of Ukrainian statehood — all this should show its neighbours (primarily Russia) that Ukraine is not part of an empire, not a territory for other peopleʼs earnings, not a passive piece on the board. Ukraine is a serious point.

Leonid Kuchma did not intend to build a nation based on “soil”, ethnicity, or language. He did not believe that this could be done without splitting a country where a quarter of the citizens voted for the communists in parliamentary elections. But he was a supporter of “statehood”.

Leonid Kuchma wanted to build mechanisms of power that would guarantee that Ukraine would be a subject, a full participant in international relations, and not an eternal victim of stronger neighbours. He was above all a pragmatist. And as a pragmatist, he understood that for the pro-Western course he chose, he needed faces that the West understood.

A week after his inauguration, Leonid Kuchma flew to Washington. There he met with Vice President Al Gore. When he returned home, he persuaded Viktor Yushchenko, the head of the National Bank, a pro-European and deeply nationalist man, a banker who had just issued a national currency with a portrait of Ivan Mazepa on the ten-hryvnia note, to become prime minister.

Leonid Kuchma promised him the support of the administration and parliament and allowed him to form a government of people whom the prime minister considered competent—some of whom Kuchma could not stand. (Perhaps he expected that the reputations of most of them would burn in the furnace of unpopular reforms.)

He did not even interfere much with his prime minister when he affected the interests of the big businessmen who had helped Leonid Kuchma get elected.

Perhaps Leonid Kuchma would have continued to be able to balance the interests of the people around him — reformers and reformed, technocrats of the new generation and red directors, supporters of budget discipline and lovers of subsidies from the same budget. But in the summer of 2000, the young publication Ukrainska Pravda (UP) reprinted several articles from other publications. These articles stung Leonid Kuchma in the most vulnerable places.

One article concerned his family, the other the connections of his entourage with international crime. The first hinted to Leonid Kuchma that when he chose his successor, he should take a closer look at his godson Andriy Derkach, a graduate of the Higher School of the KGB of the USSR. The second article, published in early September, reported that the “director of parliament” Oleksandr Volkov had been recruited by a criminal investigation investigator back in Soviet times and that he oversaw the “Ukrainian direction of activity” of an entrepreneur named Boris Birshtein.

This said little to the uninitiated, but those in the know could conclude that through Volkov the president was connected to Semen Mohylevych’s organization, which was part of the numerous and extensive Solntsevo criminal group.

The articles affected Leonid Kuchma strongly enough that he began discussing them with his inner circle.

Soon after, on September 17, 2000, the co-founder of Ukrainska Pravda Heorhii Honhadze was killed by police officers. And in late November, the leader of the Socialists Oleksandr Moroz, a seemingly forever neutralized political rival, released wiretap recordings from the president’s office. A set of these recordings reached journalists. Online publications published them along with transcripts. The recordings showed Leonid Kuchma, unadorned — authoritarian, cynical, and cruel. The tapes gave the impression that Heorhii Honhadze had been killed on his orders.

In the midst of the tape scandal, Leonid Kuchma summoned Prime Minister Viktor Yushchenko to his office. He declared that he was ready to swear on the Bible that he had not ordered the murder of the journalist. By that time, the Prime Minister had already become deeply disappointed in the president as the leader of the country, was humanly angry with him and was thinking about resigning. But Leonid Kuchmaʼs emotions convinced him that the president was not lying.

Whatever it was, it was no longer possible to rewind the film in the cassette. The main facade of the building on Bankova Street collapsed. It turned out that behind this facade something was happening that could best be described as "disastrous".

What was previously visible to the knowledgeable has become visible to everyone. That the president’s public image is a lie. That the mechanisms of Ukrainian power are not described in the articles of the Constitution. That the presidential vertical is based on compromising material, money, and so-called “deals”.

And that these “deals” have their roots in the 1970s, when a strange fusion of interests between red directors, shop stewards, criminals, and heads of the republican KGBs was formed in the Soviet empire.

To understand Leonid Kuchmaʼs biography, at least in general, it is necessary to look at what was happening in Soviet Ukraine during those years.

Chapter 3. Where Ukraine is transforming and Leonid Kuchma also changing

The people who built independent Ukraine were formed in the 1970s. For Soviet Ukraine, it was a time of great changes. A time of ambitious tasks and large-scale construction. A time of turning points and rapid careers.

Young employees of the KB "Pivdenne" in the 1970s: the Deputy Chief Engineer Vadym Pappo-Korystin, the head of the Missile Systems Development Department Stanislav Konyukhov, the leading designer Leonid Kuchma.

КБ «Южне»

1991: CEO of "Pivdenmash" Leonid Kuchma talks about the plantʼs work to presidential candidate Leonid Kravchuk.

Soviet Ukraine was experiencing several large-scale events at the same time. The first and main one was the modernization of the Strategic Missile Forces. The Soviet Union adopted a new “missile” doctrine, strengthened its silo launchers, produced hundreds of new-generation missiles (with separate warheads) every year, and decommissioned previous-generation missiles.

In the early seventies, Leonid Kuchma turned 32. The “Pivdenmash” plant and the KB “Pivdenmash”, where he worked, were assembling missiles in several shifts at that time. The young leading designer Leonid Kuchma made his career precisely on the tidal wave of missile rearmament.

The Soviet empire was able to finance this rearmament because Europe gradually opened its oil and gas markets to it. In addition, in the early seventies, the Soviet Union gained access to Western technology and Western loans — thanks to the policy of "devaluation".

American, French, Italian and Japanese corporations entered the Soviet market. It was they who largely created (or modernized) the industrial base on which Ukrainian oligarchs later made their capital. New oil refinery installations, new gas storage facilities, new metallurgical plant workshops, new nuclear power plant units — the republic was experiencing a wave of industrialization.

Using Western projects and licenses, with the help of Western specialists, in the 1970s Soviet Ukraine built a whole new industry — the chemical industry. One of the largest “chemical” projects in the republic was an ammonia pipeline that ran from Togliatti to the Odesa region, and a network of chemical plants.

One of these plants, the Odesa Port Plant, was built on the northwestern coast of the Black Sea, on the site of a fishing village. A port appeared next to the plant, from where ammonia was exported to America. The Soviet Union’s partner in this project and the buyer of ammonia was the Occidental Petroleum corporation. It was owned by Armand Hammer, an American businessman with Odesa roots. America invested several tens of billions of dollars in this project.

Finally, the third large-scale event in the life of the republic was the mass emigration of Ukrainian Jews to America. In the last two decades of the USSRʼs existence, almost 300 000 Soviet Jews left it. Most of them fled in search of a better life from large Ukrainian cities — Odesa, Kharkiv, Lviv, Kyiv. Almost two-thirds of them ended up in the USA. A fifth was in Israel. The rest settled in Canada and other countries.

This was a side and, it would seem, a tertiary effect of the policy of "détente". And yet it affected the life of the already independent Ukraine in the most unexpected way. The flow of honest emigrants behind the "iron curtain" was systematically mixed by the KGB with criminal criminals and recruited illegal agents. As a result, a significant part of the organized crime that the KGB sowed in America, Europe and the Middle East in the seventies emerged from Soviet Ukraine.

Through the hands of this "contingent", Soviet intelligence laundered money, made fake passports, and traded weapons with friendly regimes.

The first mentions of Soviet organized crime and its ties to the KGB appear in a 1986 presidential commission report.

«Babel'»

The first mentioned criminal group is from Odesa. The achievement is questionable for Odesa citizens, but interesting as a symptom of a larger social phenomenon.

«Babel'»

In 1991, the Soviet Empire collapsed and independent states emerged in its place. When that happened, illegal immigrants and their former KGB handlers found themselves among the few Soviet people with the connections needed to trade across borders on a grand scale. Which they did — an activity now called international business.

Chapter 4. Where the Soviet Empire is collapsing, but its secret service is not really

The leaders of the Ukrainian KGB love to mention in their memoirs that the Ukrainian Committee stood out among all the committees of the union republics — it was the only one with a full-fledged intelligence service. This was the so-called First Directorate.

There were several dozen departments in the KGB. The most famous of them, the "Fifth", developed, recruited and repressed Ukrainian dissidents within the republic. The "First" department worked with those Soviet citizens who were allowed to travel abroad — scientists, university rectors, directors of scientific institutes.

In addition, the Ukrainian "First" department selected people whom Moscow then trained and sent abroad as "illegals". Other departments protected the leaders, dealt with counterintelligence, speculators, transport security, and government communications.

The last person to head this secret economy in Soviet Ukraine was the head of the KGB of the Ukrainian SSR Mykola Holushko. A Ukrainian by origin, he was born into a peasant family deported to Kazakhstan, made a career in Kuzbass, and worked in Moscow. In 1987, Holushko was sent from the metropolis to head the Ukrainian KGB.

Outwardly, he was a typical party operator, grey blur and expressionless: tightly pressed lips, square face, square glasses in thick horn frames. As his first deputy, he appointed a man who was his complete opposite — the bright, imposing, solid Yevhen Marchuk, a native of the "Fifth" department. Yevhen Marchuk had a reputation as an intellectual. He spoke foreign languages, was well-versed in theater, and knew the Ukrainian intelligentsia well — because he had been developing it for years.

In early 1991, when the Soviet empire was being torn apart by centrifugal national movements but its fate was not yet decided, Mykola Holushko already knew that he did not want to remain in Ukraine. In August, during a failed coup attempt, he showed foresight, quietly waited out the putsch, and sat in the chair of the head of the Ukrainian KGB until the last day of its existence.

In early September 1991, the leaders of the republican KGBs gathered in Moscow to discuss how their organization would continue to live. It was clear to everyone that the USSR was not a tenant.

One after another, the republics held referendums on independence, elected presidents in direct and democratic elections, and became recognized states. The All-Union KGB, as a vertical structure controlled from Moscow, was heading towards its natural end.

But no one planned to simply dissolve the Committee and disperse to their new territories. The heads of the KGB of the republics agreed to create a horizontal structure to coordinate their work among themselves, the Interrepublican Security Bureau (ISB).

Mykola Holushko moved from Kyiv to Moscow, took up the position of chief of staff of ISB and managed its daily work. Meanwhile, the KGB of the Ukrainian SSR was reformed and renamed the Security Service of Ukraine.

Mykola Holushko proposed to President Leonid Kravchuk his former first deputy Yevhen Marchuk, a native of the "Fifth" department, for the position of head of SBU. Some opposition deputies of the Verkhovna Rada, who had recently been dissidents, were outraged by this candidacy — but they were persuaded.

In November 1991, the Verkhovna Rada approved Yevhen Marchuk as head of SBU. And in late December, Mykola Holushko received a call from one of Boris Yeltsinʼs trusted security officers, Interior Minister Mykola Barannikov. He said that the Russian president had instructed him to create a new security ministry.

Chapter 5. Where the Russian Security Minister and the head of SBU shake hands

As in independent Ukraine, in the newborn Russia, Soviet power structures were collapsing and new ones were emerging. Yeltsin purged those who supported the August putsch, removed the people of the last Secretary General, and changed the structure of the government.

He noticed Barannikovʼs loyalty during the putsch — he did not sit out and spoke out against the State Committee for Emergency Situations (SCES). In December 1991, Yeltsin instructed him to create a new ministry from the Ministry of Internal Affairs and the Ministry of Internal Affairs.

This is how the Ministry of Security appeared in Russia. It did not last long, only two years — until December 1993, but it is important for this story. Viktor Barannikov became the Minister of Security. Mykola Holushko was his first deputy.

One of the tasks of the Ministry was to control foreign transactions of Russian state-owned companies. “Foreign” also means the ones of independent Ukraine as well. In fact, President Yeltsin set a tandem of Russian cops and Russian Chekists to oversee trade relations with Ukraine.

In late 1992 and early 1993, the Russian Ministry of Security signed several agreements on cooperation with SBU. Viktor Barannikov arrived in Kyiv. He was taken on a boat ride down the Dnipro River and driven along Khreshchatyk. In the spring of the following year, Yevhen Marchuk returned to Moscow on a return visit.

Apart from “Gazprom” gas contracts and Siberian oil contracts, one of Russia’s largest foreign deals was the deal with Armand Hammer Corporation to supply ammonia via Ukraine.

Its importance could not be overestimated. Russia inherited from the USSR one of the world’s largest ammonia producers. In exchange for ammonia, it received phosphate fertilizers, which fed the agriculture of all post-Soviet countries, including Ukraine.

Armand Hammer died in 1990, but the contract with his company was valid until 1998. The turnover of ammonia production and export was estimated at hundreds of millions of dollars a year. Before the collapse of the empire, the project was completely managed from Moscow. Now one link of this export chain belonged to independent Ukraine.

In independent Ukraine, this link could not be left unattended. It is obvious that those who would take control of the financial flows associated with ammonia exports were destined to become rich and influential people. It is also obvious that the new Russian authorities had their own interests in this matter.

Chapter 6. Where Leonid Kuchma agrees to make a silk purse of a sowʼs ear ЧАСПМРИОЛТ

Leonid Kuchma became Prime Minister of Ukraine in October 1992. Before taking up this position, he spent three years in the Verkhovna Rada, without attracting attention to himself.

Leonid Kuchma was not a leader of deputy groups, formal or informal, and peopleʼs representatives did not crowd around him during breaks. MP Leonid Kuchma still remained the director of the plant. All things considered, the survival of “Pivdenmash” interested him more than lawmaking or speeches from the podium.

In his memoirs, Leonid Kuchma says that after being elected as a deputy, he went abroad for the first time in his life and experienced a culture shock. He became friends with his fellow countryman, the speaker of the Verkhovna Rada Ivan Plyushch, who was a true Ukrainian patriot. Leonid Kuchma began to read books on Ukrainian history and look at the Soviet empire with different eyes. It was Ivan Plyushch who suggested that Kuchma consider becoming prime minister.

Most likely, after three years in parliament, Leonid Kuchma understood what exactly he would have to deal with. The countryʼs economy was completely dependent on Russian oil and fuel for nuclear power plants, as well as Central Asian gas, which went through Russia.

Russia, in turn, was its main sales market. Trade between the two countries was already being handled by intermediaries who appeared under President Leonid Kravchuk.

It was assumed that the Prime Minister would manage the entire national economy of the country in manual mode and at the same time reform it. One part of his ministers was essentially the directors of state industrial holdings (ministries), the other was strategist-legislators who were supposed to rebuild the mechanisms of state administration.

The task of the Prime Minister could be compared to the need to disassemble a Soviet car on the go, without interrupting the trip, and make a Western airplane out of it — in fact, to make a silk purse of a sowʼs ear. Leonid Kuchma freed himself by receiving special, extraordinary powers from the parliament.

The government had a budget of approximately $27 billion. Almost a fifth of this money was to come to the treasury through foreign economic activity. This activity was also supervised by the prime minister. Leonid Kuchma determined who could trade with Russia and America, what exactly they could trade and in what volumes.

Chapter 7. Where Leonid Kuchma oversees how “Ukraine” works

Businessman Boris Birshtein (the same one from the article reprinted by Ukrainska Pravda) appeared in Ukraine when Leonid Kuchma became prime minister, in October 1992. He was a former emigrant, the current owner of a dozen European companies, one of which was called "Seabeco". Boris Birshtein had been trading in CIS for several years. In Russia, his patron was Security Minister Viktor Barannikov.

The path to Ukraine was quite obvious. Here, through his deputy Mykola Holushko, Barannikov had established connections, primarily with Yevhen Marchuk. By the time Leonid Kuchma took the prime ministerʼs chair, Yevhen Marchuk had been head of SBU for a year.

Boris Birshtein was a wealthy man and made no secret of his success. He flaunted a mink coat and a diamond-encrusted bracelet. He traveled around Moscow in a motorcade of limousines, and his residence was a mansion on the Sparrow Hills. The “SEABECO” livery adorned the sides of his private jets, which he sometimes provided to presidents and prime ministers of the CIS countries.

With the participation of Boris Birshtein and Yevhen Marchuk, the Ukrainian government created the joint-stock group "Ukraine". It included eight Ukrainian industrial monsters located on the route of the ammonia pipeline "Togliatti — Odesa".

These were three metallurgical plants ("Zaporizhstal", "Kryvorizhstal" and Donetsk Metallurgical Plant), four chemical plants and the Odesa Port Plant — all of them were subordinate to the new Minister of Industry Anatolii Holubchenko. Boris Birshteinʼs company "Seabeco" received 35% of the groupʼs shares. The SBU General Oleksandr Nezdolya — Yevhen Marchukʼs first deputy — was appointed vice-president of the group.

In January 1993, the governments of the two countries agreed that Ukraine would transit two million tons of Russian ammonia through its port per year. After that, Leonid Kuchma issued a quota for the export of one million tons to the “Ukraine” AG.

In addition, the group was given quotas for the export of products from its chemical and metallurgical plants. With the foreign currency it was to purchase spare parts, equipment and raw materials for the Ministry of Industry (which was essentially an industrial holding) worth $325 million.

There were two important circumstances in this scheme. First, all transportation (distillation, transshipment) was handled by the Ministry of Transport (which, in fact, was a transport holding), using budget funds. The Prime Minister instructed it to do this by his resolution. Second, AG received the plantsʼ products (pig iron, rolled steel, ammonium nitrate) essentially free of charge — again at the expense of the budget.

The budget compensated the plants for their cost — in coupon-karbovanets and at “domestic prices”, which were again set by the Cabinet of Ministers. Given that inflation in 1993 was 10 000%, we can say that the plants gave their products away for free.

The scheme would probably not have been remarkable if the factories had managed the foreign currency. But the company "Seabeco" received the currency into its foreign accounts. It spent part of it to purchase goods for the Ministry of Industry, and the rest was to be transferred to the accounts of the Ministry of Finance in the state-owned “Ukreximbank”.

From this balance, the Ministry of Finance was to compensate the Ministry of Transport for its expenses. The SBU General Oleksandr Nezdolya was to monitor that "Seabeco" properly transferred the currency to the Ministry of Finance.

Stakeholders of AG "Ukraine" justified its necessity by the fact that Soviet directors were inexperienced, did not know how to conclude profitable export contracts and became victims of scammers. Directors of factories saw this scheme differently. For example, the director of the Donetsk Metallurgical Plant Volodymyr Slednev said that in fact AG was used to privatize these factories step by step.

After the plant sold its products at domestic prices (with inflation of 10 000%), it found itself in debt. These debts were then bought up by those who had cash, that is, companies like “Seabeco”, and exchanged for a share in the share capital. For example, part of the shares of “Zaporizhstal” ended up in the hands of Boris Birshteinʼs son-in-law, a young trader Alex Schneider, and his partner Eduard Shifrin.

Chapter 8. Where Leonid Kuchma answers the question of where the oligarchs came from

It would probably not be an exaggeration to say that AG "Ukraine" was a bit of a trading company, a bit of a customs office, a bit of a tax administration, a bit of a Ministry of Finance, and a bit of a State Property Fund. Formally, it belonged to the state. In essence, it was managed by private individuals.

The early 1990s proved to be a time when the fledgling Ukrainian state was leasing out its key functions. Perhaps this process developed spontaneously. Perhaps under pressure from Russia. Perhaps due to well-intentioned but mistaken decisions.

It is also possible that with the help of companies such as AG "Ukraine", it was easy to direct cash flows to so-called "their" people, given that they would then pay for the costs of building political parties, the work of election headquarters, and the creation of pro-government TV channels.

The most famous companies of that time received foreign trade quotas from presidents and prime ministers. Thanks to the quotas, they could earn money on a large pan-Eurasian chain. Natural resources from Russia — oil, gas, ammonia, coke and coking coal, copper and aluminum, wood — went to Ukraine. Here they were transformed into gasoline and fuel oil, fertilizers and rolled metal.

Products from industrial plants and machine-building plants went back to Russia: pipes, ferroalloys, titanium sponge, tires, electric locomotives, transformers, gas turbines and even tractors. They were produced by Leonid Kuchma’s native “Pivdenmash”.

Almost all the companies that were well-known in the nineties — Boris Birshteinʼs “Seabeco”, Hryhorii Luchansky and Vadym Rabinovychʼs “Nordex”, Viktor Medvedchuk, Hryhoriy Surkis and Bohdan Hubskyʼs “Slavutych” concern, Ihor Bakayʼs “Respublika” corporation, Ihor Markulov and Yevhen Shcherbanʼs “Aton”, Yulia Tymoshenko and Oleksandr Hravetsʼ KUB — grew up in different years on different links of this new great Silk Road. Their owners joined the cohort of Ukrainian businessmen who acquired political parties and media outlets.

Unfortunately, the history of AG "Ukraine" leaves more questions than answers. Who was the real creator of the group — Leonid Kuchma or Yevhen Marchuk? What did they agree on among themselves and what with Russia? Did the director of "Pivdenmash" know that he was to form a shadow privatization machine when he was persuaded to become prime minister? What was the role of the then president Leonid Kravchuk?

Almost 20 years later, Leonid Kuchma published a book in which he explained that, while in power, he had done everything right. The president devoted one sentence to answering these questions. He wrote that “our large capital arose on the basis of small Ukrainian companies that managed to secure the patronage of the government and take control of certain sources of rent”. This was a fairly accurate answer. Although very laconic.

Chapter 9. Where in Russia another coup takes place

While Leonid Kuchma was managing Ukraine’s economy and trying to reform it, dramatic events were taking place in Russia. Throughout 1993, President Boris Yeltsin fought for power with his parliament and Vice President Alexander Rutsky. The echoes of this battle reached Ukraine.

By coincidence, Alexander Rutsky was in charge of Russian agriculture in those years and conceived several large-scale projects there. Under Rutsky’s wing, the former Soviet Minister of Mineral Fertilizers created the “Rosagrohim” concern. It included dozens of Russian chemical plants that, in particular, produced ammonia.

It was an analogue of “Gazprom” — only in the chemical industry. The concern had a division called Agrohimexport. It was he who exported ammonia through the “Togliatti-Odesa” pipeline and was the counterparty of AG Ukraine on the Russian side.

Throughout the spring and summer of 1993, Alexander Rutsky fought the president for power. In one of the most striking episodes of this struggle, he spoke in parliament, where Yeltsinʼs opponents formed the majority. From the podium, Rutsky declared that he had collected eleven suitcases of compromising material on the president and his entourage.

During the confrontation between the president and the vice president, the security forces split into two camps. The Security Minister Viktor Barannikov sided with Rutsky. His first deputy Mykola Holushko showed greater foresight and sided with Yeltsin. The president removed Barannikov from the post of security minister and put Holushko in his place.

The president’s people began to collect compromising material on the president’s enemy. The search did not last long. They came across one of Boris Birshtein’s partners, the young adventurer Dmitry Yakubovsky, and offered him a deal.

Yakubovsky betrayed Birshtein. He flew to Moscow and testified. His testimony showed that the owner of “Seabeco” transferred several million dollars to Rutskyʼs front men, and Viktor Barannikovʼs wife bought furs and diamonds at Birshteinʼs expense.

In October 1993, the parties stopped exchanging compromising material and switched to combat operations. Tanks and armored personnel carriers of the Taman division loyal to the president shot up the parliament building and the barricades around it. Rutsky and Barannikov were arrested. After that, Boris Birshteinʼs business in Russia came to naught.

A few weeks before the collapse of Alexander Rutsky, in late September 1993, Prime Minister Leonid Kuchma resigned. Throughout his entire term as prime minister, the Ukrainian parliament, the president, and he himself had been arguing over power, although without bringing in tanks.

It was already clear that the country would change power next year. Early elections were called. Leonid Kuchma probably realized that there was no point in continuing in this position.

Chapter 10. Where Leonid Kuchma returns to the game

The struggle between the candidates for the post of President of Ukraine in 1994 was not as fierce, but no less dramatic.

Years later, Leonid Kuchma said that he had no intention of returning to politics. That he had been “persuaded” again. First, he was persuaded to become president of the Ukrainian Union of Industrialists and Entrepreneurs. Then industrialists and entrepreneurs persuaded him to run for president. They said that only he could save industry.

Leonid Kuchma began to gather a team and allies. Ivan Plyushch turned out to be a loyal ally. He also put forward his candidacy, became an obvious “spoiler” for Kravchuk and bit off a little over 1% of the vote in the first round.

Dmytro Tabachnyk became the public head of the election headquarters. Less public was the oil trader Oleksandr Volkov (the future “director of the parliament”). One of the staff members was his godson Andriy Derkach, a recent graduate of the USSR KGB Academy.

Leonid Kuchma gets into his car to go to his first press conference after the elections. His personal bodyguard is in a white jacket.

Leonid Kuchma leaves the Ukrainian House from the first press conference after the elections. Behind him, on the left in a white shirt, is the head of the campaign headquarters Dmytro Tabachnyk. On the right, in a black jacket, is Oleksandr Volkov. Kyiv, July 13, 1994.

The 1994 presidential election is not described in detail. There is a good description of the media campaign of Leonid Kuchmaʼs headquarters. However, all books and publications bypass questions (for example, about what Oleksandr Volkov and Andriy Derkach were doing in the headquarters).

After Leonid Kuchma won the elections, Volkov appeared in public already in the status of assistant to the president "on general issues". Andriy Derkach was as deputy head of the Control Service in the presidential administration.

It is also unclear whether the future president negotiated something with the head of SBU Yevhen Marchuk. In the first government under President Kuchma, he became the first deputy prime minister and took up the most pressing issues: "Crimean separatism" and negotiations with Russia on the division of the Black Sea Fleet.

At the same time, the president instructed him to investigate the activities of businessmen who, under Leonid Kravchuk, were intermediaries in the purchase of gas and oil products: Ihor Bakay (Corporation "Respublika"), Viktor Medvedchuk, Hryhorii Surkis and Bohdan Hubsky (Concern "Slavutych"). Godson Andriy Derkach was included in the commission of "investigators".

For those involved in the investigation, everything ended well. The “Respublika” Corporation was only ordered to repay its debts to the budget — $209 million. Ihor Bakayʼs company continued to import gas to Ukraine, and later it was assigned supplies to seven regions. Bakay became the first chairman of the board of “Naftogaz”. Bohdan Hubsky and Viktor Medvedchuk joined the governmentʼs "fuel and energy" working group. The government guaranteed the loans that “Slavutych” took from the American agency USAID to import gasoline from America.

A circle of businessmen close to the president has formed.

Chapter 11. Where Leonid Kuchma is not guilty

One of the most common claims against Leonid Kuchma is that he created oligarchs.

It is clear that Leonid Kuchma did not actually create oligarchs. He grew up in the oligarchic system, was formed in it and was a part of it, like most Soviet people. Half of his life fell under the power of CPSU. The party vertical controlled all the media, made all personnel appointments, de facto owned all property and distributed all cash flows. In essence, it was the party of the oligarchy.

When the “red” oligarchs let go of power, a fight immediately began for it. Everyone took part in the fight: the newborn president and his top brass, the deputy groups and their leaders, the heads of regions, the factory directors. And most importantly — a fusion of KGB ranks, criminals, and shopkeepers who first became cooperators and then businessmen of the new formation.

By the time Leonid Kuchma became president, they had earned hundreds of millions of dollars, acquired stakes in the largest enterprises, and formed clans and financial-industrial groups.

They had not yet built new national television channels, but were already buying up regional newspapers and cable channels — and at the same time, small political parties. They made deals and created political alliances, betrayed each other, and squeezed each other’s property. When Leonid Kuchma became president, he subdued the rebellious and used the services of the loyal.

The 1990s are often called the era of wild capitalism. But a much more important characteristic of this era was wild politics, without rules. And if there is one thing to credit Leonid Kuchma with, it is that he forced the creation of new rules for the state.

Chapter 12. Where young and old idealists write the Constitution

Every Monday at eight in the morning, President Leonid Kuchma held a planning meeting. In his office in the building on Bankova Street, he gathered five or six people: the Secretary of the National Security and Defense Council Volodymyr Horbulin, the Prime Minister and the First Deputy Prime Minister, the head of Administration Dmytro Tabachnyk, his deputies for personnel and domestic policy.

They analyzed the events of the previous week and planned the next. Volodymyr Horbulin personified the "Western vector" of politics. Dmytro Tabachnyk — the "Eastern", pro-Russian one.

If you look at Ukraine through the eyes of newly elected President Leonid Kuchma, it was in a state of feudal fragmentation, and its economy was ungovernable.

The country was more of a conglomerate of regions than a unitary state. In June 1994, it held local elections. Now all regions had their own heads, with their own “regional” legitimacy. The Autonomous Republic of Crimea even declared “independence” and elected its own “president”.

The government was headed by an experienced but not appointed person. Annual inflation was 400%. Ukraine had to quell “Crimean separatism”, complete nuclear disarmament, share the Black Sea Fleet with Russia, deactivate the operating units of the Chornobyl nuclear power plant, and rebuild its sarcophagus — the list of problems was endless.

First of all, Leonid Kuchma needed to create full-fledged mechanisms for state management. For example, the Ukrainian government had a Customs Committee. At the same time, there was still no department that would collect taxes. The budget system as a whole lived according to the law adopted in the Ukrainian SSR.

At that moment, Ukraine stood at a crossroads. The parliament and its speaker Oleksandr Moroz wanted to build a “parliamentary” vertical. According to their plan, the parliament was not only supposed to pass laws, but also to become the center of executive power.

Leonid Kuchma, of course, was a supporter of a different path — the executive vertical was supposed to obey him. From the point of view of the theory of the separation of powers, Leonid Kuchma’s program looked more progressive. All that remained was to adopt a new Constitution.

For more than half a year, from the winter of 1994 to mid-summer of 1995, the president and parliament fought a positional struggle for power. It included numerous rounds of negotiations, successful and failed votes, ultimatums, and press campaigns.

Finally, on June 8, 1995, President Leonid Kuchma and Speaker Oleksandr Moroz signed the Constitutional Treaty. It somewhat untied the presidentʼs hands: now he could appoint a prime minister of his own choosing. He appointed the former head of SBU Yevhen Marchuk to this position.

One of the authors of the Constitution Roman Bezsmertny told Babel about how the work on the Constitution continued. In the first draft of the Constitution, the parliament consisted of two chambers.

The upper chamber (Senate) was to deal with the problems of the regions, control their budgets, and consider candidates for higher positions in the state. Creating a bicameral parliament was an old idea of the founders of the Peopleʼs Movement. However, the deputies eventually buried this idea.

Since the summer of 1995, the draft Constitution had been lying in parliament without movement — until the leader of the "Statehood" parliamentary group Ihor Yukhnovsky took up the task. He gathered an informal group of MPs who worked on the text. At some point, the speaker of parliament drew attention to this group, it acquired official status, and Mykhailo Syrota was elected its chairman.

Once a week, the group met with Leonid Kuchma and discussed the developments. The presidentʼs advisers argued with the deputies. Honored lawyers who specialized in constitutional law argued with everyone. Roman Bezsmertny recalls that in these disputes the president acted as an arbitrator.

There were enough young deputies in the working group. Their idols were members of the “Ukrainian Helsinki Union” who had served time in Soviet camps. Some dissidents were elected to the Verkhovna Rada and occupied neighboring seats at meetings.

For young people, they were unconditional moral authorities. Young MPs were convinced that the main element of the basic law was human rights. For the Ukrainian people, they wanted freedom: freedom of speech, freedom to live without a residence permit, freedom to create parties and movements. The organization of the state was important, but not that important — everyone understood that it would change more than once. They based the Ukrainian Constitution on the principles of the Declaration of Human Rights.

A year passed from the Constitutional Treaty to the Constitution. During this time, the president became disappointed in the Prime Minister Yevhen Marchuk and dismissed him for "political ambitions". Yevhen Marchuk "landed" on the election list of the SDPU(o) party of Viktor Medvedchuk and Hryhorii Surkis.

Chapter 13. Where we look at the wrong side of "Ukraine"

Ukrainian politics of the 1990s had two sides: the front and the back. The front side is well described. Election programs, transcripts of congresses, and voting results have been preserved. Politicians of that time usually willingly recall this — their ideas, debates, and meetings.

On the wrong side, they shared money and property. They replenished party coffers. They financed newspapers and TV channels. We have to judge him based on court documents and reports from intelligence services of various countries.

The cover of a 1996 FBI report describing Semen Mohylevychʼs organization. It is easy to find on the Internet.

«Babel'»

The cover of Boris Birshteinʼs civil court case, from which details of his life are known. Babel obtained a copy of this case from an Ontario court.

«Babel'»

The most informative of them was compiled by the FBI in 1996. It is called "Eurasian Organized Crime" and describes a large decentralized network operating in the CIS countries, the USA, Israel and Europe. It included hundreds of people, it consisted of five organizations.

One of them was the group of Semen Mohylevych. Within the network, Mohylevychʼs group was engaged in financial transfers (as well as fraud, kidnapping and extortion, trade in vodka, oil and weapons — everything in the world).

A member of Mohylevychʼs group, among others, is listed as co-owner of the Inter TV channel Ihor Pluzhnikov. Another well-known name that appears in this report is Vadim Rabinovich, then an investor in the “Studio 1+1” TV channel. If you believe the FBI report, in 1995 he met in Tel Aviv with Semen Mohylevych and his partner Serhii "Mikhas" Mikhailov. The meeting took place in the office of a man everyone had known for many years — Boris Birshtein.

By that time, Boris Birshtein had already moved to several cities. After unsuccessful tours in Russia, he lived mainly in Belgium. In 1994, a group of American and European investigators began to investigate him and other members of Mohylevychʼs organization.

In 1995, investigators from four countries raided Boris Birshtein’s apartment in Antwerp with a search warrant and an arrest warrant. Coincidentally, he was vacationing in Costa Rica — and so he avoided arrest. The police simply searched his apartment, seized his documents, and froze his Belgian accounts.

As soon as Boris Birshtein learned of the searches and the criminal case against him, he and his wife left for Israel. There, he quickly obtained a passport — likely through another member of the organization Shabtai Kalmanovich.

However, in Israel he was summoned for questioning by the police. Boris Birshtein began to worry about his freedom. In early 1997 he moved to Toronto and bought a house for his family there. In the 2000s his international “business” gradually withered away — so much so that he sued his son over the apartment.

The government deprived AG "Ukraine" of the right to transit Russian ammonia through the "Togliatti-Odesa" pipeline in April 1997.

Chapter 14. Where Leonid Kuchma remains a mystery

Probably, the second president of Ukraine does not care how he is remembered. Otherwise, he would not have released four autobiographical books. However, they contain so many obvious omissions and manipulations that it is difficult to believe anything else.

Only one thing can be said for sure about Leonid Kuchma — he was more than anyone else ready to lead the newborn Ukrainian government, which was dictated by time and circumstances.

Some of his traits become intuitively clear. Apparently, he loved power, although at first he pretended that he did not need it. Apparently, he became a master of arbitration of different interests while still at the rocket factory. He was once appointed chairman of the party committee of the factory so that he could balance the interests of two titans — the CEO of “Pivdenmash” and the general designer of the KB “Pivdenne”.

Apparently, back in those years, he understood: if you survive the battle of the titans, you can find yourself at the top. Perhaps, then he learned to hide his true ambitions.

His first teachers and role models were the most powerful Soviet industrialists — the general designers of missile design bureaus. Although he was formed in the Soviet system, he turned out to be a flexible person. His views changed under the influence of his environment. He knew how to gather young, intelligent and ambitious people around him.

However, first of all, he was guided by what benefit they could give him, and only then — by their moral qualities and values.

The most popular slogan of the 1990s was “Reforms!”. It was assumed that these reforms would be market-based. In a sense, that is exactly what happened: the party oligarchy was reformed into a resource-trading oligarchy. If one can draw any conclusion from Leonid Kuchma’s biography, it would be this: the ideology of these reforms is not so important, what is important is what kind of people they make rich and influential — moral or immoral.

The reforms of the 1990s made mostly immoral people rich and influential. The key question, of course, is whether moral people had even a chance. Perhaps the only choice Ukraine had then was oligarchic democracy or chekist democracy.

At the center of this choice is Leonid Kuchma. His biography is the history of our country. Years later, our true history remains unknown.